Teachers of the Poor

The raging debate about income inequality has focused on the growing demand for well-trained workers and the declining quality of American education. The mismatch is contributing to rising incomes for the well-educated and stagnant incomes for the poorly educated. Improving the education of the poor is thus a sensible and promising target for improving the incomes of the poor.

Thus the case getting underway in California attacking teacher tenure as a source of poor teachers being assigned to the poorest schools is timely and important. Teacher tenure goes on trial in Los Angeles courtroom/2014/01/26/

The issue of the unionization of public sector workers more generally is contentious. In the private sector unions can balance the market power of employers and are restrained in their demands by their impact on an employer’s bottom line. If excessive wages make a company uncompetitive and it losses market share or goes out of business, the jobs go with it. In fact, a constructive relationship between unions and their employers can potentially improve wages and the bottom line.

Public sector workers, on the other hand, are not constrained by the government’s bottom line (tax payers). Charles Lane provides a good discussion of this issue in today’s Washington Post: Public Sector Unions Interfere with the Public Interest/2014/01/27/.  Unionized or not, public sector workers have long been protected from political interference by the Civil Service system. These protections were established in order to reduce the role of political favoritism in public sector hiring and promotion. However, the trade-off was the creation of a system in which promotion had much more to do with years of service than performance and in which it was difficult to fire anyone thus sheltering mediocre workers.

These trade offs are not easily resolved. If government supervisors can evaluate performance and reward it appropriately, they can also be easier prey for political interference. If they can’t, the worst performing employees rise to the top over time just as fast as the best performing and we get the civil service that we know and love. The plaintiffs in the California case “are nine students who say they were trapped in classrooms with “grossly ineffective teachers” who could not be fired because of the job protection laws.” (W.Post)

The solution, of course, is to leave as much in the private sector as possible. Private schools, including government funded but privately run charter schools systematically produce better results than public schools, especially for the poor.

In an interesting footnote, the plaintiffs legal team includesformer U.S. solicitor general Ted Olson and Theodore Boutrous, who most recently paired to win a U.S. Supreme Court decision that struck down California’s prohibition against same-sex marriage.  Olson and Boutrous had famously represented opposing sides before the Supreme Court in Bush v. Gore, which halted the Florida vote recount and resulted in Bush capturing the presidency. Olson’s wife Barbara died on September 11, 2001 when American Airlines flight 77 crashed into the Pentagon.

About wcoats

I specialize in advising central banks on monetary policy and the development of the capacity to formulate and implement monetary policy.  I joined the International Monetary Fund in 1975 from which I retired in 2003 as Assistant Director of the Monetary and Financial Systems Department. While at the IMF I led or participated in missions to the central banks of over twenty countries (including Afghanistan, Bosnia, Croatia, Egypt, Iraq, Israel, Kazakhstan, Kenya, Kosovo, Kyrgystan, Moldova, Serbia, Turkey, West Bank and Gaza Strip, and Zimbabwe) and was seconded as a visiting economist to the Board of Governors of the Federal Reserve System (1979-80), and to the World Bank's World Development Report team in 1989.  After retirement from the IMF I was a member of the Board of the Cayman Islands Monetary Authority from 2003-10 and of the editorial board of the Cayman Financial Review from 2010-2017.  Prior to joining the IMF I was Assistant Prof of Economics at UVa from 1970-75.  I am currently a fellow of Johns Hopkins Krieger School of Arts and Sciences, Institute for Applied Economics, Global Health, and the Study of Business Enterprise.  In March 2019 Central Banking Journal awarded me for my “Outstanding Contribution for Capacity Building.”  My most recent book is One Currency for Bosnia: Creating the Central Bank of Bosnia and Herzegovina. I have a BA in Economics from the UC Berkeley and a PhD in Economics from the University of Chicago. My dissertation committee was chaired by Milton Friedman and included Robert J. Gordon.
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